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Livestock Insurance

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Livestock Insurance

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Insurance forms and endorsements vary based on insurance company; changes in edition dates; regulations; court decisions; and state jurisdiction. The instructional materials provided by The Insurance Community Center and its authors is intended as a general guideline and any interpretations provided by The Community do not modify or revise insurance policy language. •Information which is copyrighted and proprietary to Insurance Services Office, Inc. (“ISO Material”) is included in this publication. Use of the ISO Material is limited to ISO Participating Insurers and their Authorized Representatives. Use by ISO Participating Insurers is limited to use in those jurisdictions for which the insurer has an appropriate participation with ISO. Use of the ISO Material by Authorized Representatives is limited to use solely on behalf of one or more ISO Participating Insurers.•The authors of these materials, Insight Insurance Consulting and The Insurance Community Center assumes neither liability nor responsibility to any person or business with respect to any loss that is alleged to be caused directly or indirectly as a result of the instructional materials provided.

Insight Insurance Consulting714 803-5830

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All Rights Reserved

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Your Instructor Today

Mike Sergeant , AFIS Sales & Service Director, The Hartford Financial

Services Livestock

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Sponsored by: www.HartfordLivestock.com


Topics covered

Background on Livestock Insurance Specific types of Livestock Insurance

Mortality Insurance Pasture Insurance Feedlot Insurance Dairy Herd Insurance Auction Market Insurance Transit or Cargo Insurance Import/Export Insurance

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Exposures to Loss

At “scheduled” locations At “un-scheduled” locations On pastures or grazing land At an auction yard While in transit During loading or unloading

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Background on Livestock Insurance

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Background on Livestock Insurance Livestock is available under most Farm

Package Policies Livestock may be scheduled or included

under “property” in the form Caution:

Review values carefully Farm Policies have limited values which

may not cover the Livestock owner’s exposures

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Background on Livestock Insurance—Definition of Terms Purebred/Registered

The animal is registered with a Breeed Association and its bloodlines are recorded

Stocker A non-registered animal used for breeding or

dairy purposes Feeder

A non-registered animal being fed for eventual slaughter intended to enter the food chain

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Background on Livestock Insurance—Definition of Terms

Feedlot A lot or combination of buildings

intended for confined feeding and raising of livestock using supplemental feed sources

Pasture A confinement area where grass or

crop residue is used for livestock grazing

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Current Market Value The average market value for Feeder or

Stocker livestock as determined at the nearest applicable market or as published by the USDA price reporting service

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USDA The United States Department of

Agriculture which is the governing authority over all Agricultural related affairs within the US

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Mortality Insurance

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Mortality Insurance

This type of insurance is basically a type of Term Live type of coverage for Horses, Cattle and Dogs

The animal is insured against Death (or Destruction for humane purposes) which may occur during the policy period.

Covered causes of Death include “accident”, “Illness” and “disease”.

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Mortality Insurance

Additionally the policy contains the “hazards of transportation” anywhere in the U.S. and Canada.

Particular attention should be given to insurance company definitions of these coverage terms.

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Mortality Insurance

Rates for Mortality Insurance vary depending based on the use, age and value of the animal being insured.

A veterinarian exam is usually required by the insuring company prior to accepting the risk.

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Mortality Insurance

Most insurance carriers will accept a “Statement of Health” which is completed by the owner of the animal provided that the animal has been under the owner’s care for more than 30 days.

Livestock insured on a Mortality Policy are usually higher value “Registered or Purebred” animals whose loss would cause economic hardship to their owner

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Mortality Insurance

There are several endorsements available on a Mortality Policy offered for an additional premium. They may include: Surgical Coverage; Major Medical Coverage; Loss of Use: Limited Loss of Use; Emergency Colic Surgery and Breeding

Soundness Coverage.

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Pasture Insurance

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Pasture Insurance

This coverage provides protection to livestock (usually cattle) that are put on large expanses of pasture land to graze prior to being moved to a feedlot.

In the west, pasture land can consist of several thousand acres and usually involve leases of BLM (Bureau of Land Management) land.

In other areas pastures may consist of less than 20 acres.

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Pasture Insurance

Coverage under this type of insurance is available for one of three policy periods: Annual 12 month policy, Winter Policy ( Oct. 1 through April 30th) Summer Policy (May 1st through Sept.

30th).

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Pasture Insurance

Coverage is usually written as Specified Perils wherein the policy insures the livestock for “Death Only” when caused by a Specific Peril.

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Pasture Insurance Most policies provide perils including

Fire, Lightning, Drowning, Attack by Wild Dogs or

Animals, Electrocution by

Artificial Means,

Vandalism or Malicious Mischief,

Theft (Excluding Mysterious Disappearance),

Animal Collision Smothering Directly

caused by a blizzard or snowstorm.

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Feedlot Insurance

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Feedlot Insurance

Feedlot Insurance is similar in nature to Pasture Insurance.

The coverage protects Livestock which is in a confined area which are being fed grains and supplements.

This type of operation is usually a situation where the cattle are being fattened and will be sent to slaughter to become steaks and hamburger at the local supermarket.

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Feedlot Insurance Most policies provide perils including

Fire, Lightning, Drowning, Attack by Wild Dogs or

Animals, Electrocution by

Artificial Means,

Vandalism or Malicious Mischief,

Theft (Excluding Mysterious Disappearance),

Animal Collision Smothering Directly

caused by a blizzard or snowstorm.

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Feedlot Insurance

Typical perils NOT insured on the policy Grazing Lagoon, stagnant or flood water Contamination from sources other than

feed or water Errors in mixing of feed

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Feedlot Insurance

Limits of insurance will usually be written at “Current Market Value” and may have a Maximum Limit per Occurrence.

Feedlot operations are spread throughout the United States but the larger ones are concentrated in the states of Texas, Kansas, Oklahoma and Nebraska. These are prime areas where weather conditions can pose a serious threat to Livestock.

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Dairy Herd Insurance

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Dairies are similar to feedlots since they usually consist of cattle that are in a confined area and fed grains and supplements.

The difference is that in some areas, Dairy cattle are housed in enclosed structures while in the Southwest and warmer climates the cattle are kept in pole barns with fans and misters to keep them cool and comfortable

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In this situation insurance coverage is for ordinary Dairy cattle and can include Milking Cows and Heifers as well as dry cows.

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Dairy Herd Insurance Most policies provide perils including

Insurance protection is against Death or Destruction for humane purposes following a Specified Peril.

In addition coverage is provided for the Specified Perils including: Fire, Lightning, Drowning, Attack by Wild Dogs or Animals, Electrocution by Artificial Means, Vandalism or Malicious Mischief, Theft (excluding mysterious disappearance) Animal Collision and Smothering Directly caused by a blizzard or snowstorm.

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Dairy cattle values tend to fluctuate with the price of milk, however, keep in mind that the average Dairy Cow has a life span of 5-7 years and depending on the butter fat content of her milk, she can be difficult and expensive to replace should a loss occur.

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“Contaminated Feed & Water” Endorsement An endorsement for Feedlot and Dairy Herd

Insurance What this additional coverage form offers is

protection for Death of the Livestock when caused by a Contaminant in the food and water supplied to the cattle.

It is a Death Only coverage and can be purchased with a choice of Limits and Deductibles to fit each individual situation that Feedlot and Dairy owners may require.

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“Contaminated Feed & Water” Endorsement This endorsement has been an important

addition to coverage’s in the West and is spreading throughout the United States.

This insurance is rapidly becoming a Bank Loan requirement for larger facilities.

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Auction Market Insurance

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Prior livestock forms death with cattle that was being raised either on a pasture near a farm or ranch or in a confined area such as a feedlot or dairy

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This coverage is usually written for the owner or owners of a Livestock Auction Facility.

In most cases these types of operations include buildings and pens which hold the livestock prior to and after the sale along with a Sale Ring where the animals are bid on by interested buyers.

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Auction Yard Coverage

Typical “premises” forms do not include auction yard locations

Transit forms cease when the transportation of livestock ends

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Auction Market owners are responsible for the Care, Custody and Control of the livestock when on their premises.

With Auction Market Insurance there is usually no deductible and livestock are insured for their “Current Market Value”.

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There are three broad categories of exposures/coverage

Yard Coverage This insures the animals received on the

premises and protects against loss to the Livestock while kept in the Yards resulting from Specified Perils such as Fire, Windstorm or Tornado, Electrocution, Hail & Theft while on the premises up to a period of 10 days.

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Accidental Death & Crippling while in the Yards This protects the animals from the

hazards of crippling or even death while being moved through the alleys, pens, sheds & barns of the Auction Market facility.

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Mortgage & Theft Coverage This is a protective measure for the Auction

Market business It is written to protect the Auction Market itself

from being held responsible for selling cattle that have a Mortgage on them and are sold through the Market but the Lender never receives payment for their monetary interest or mortgage that they hold on the livestock.

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The coverage’s are usually written as a monthly reporting type of Policy. The Auction market reports monthly gross sales and pays a percentage of those sales as premium for all three of the protective coverage’s offered.

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Livestock Transportation

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Transportation

Perhaps one of the greatest exposures that cattle have to loss and one which occurs on a daily basis throughout the U.S. is exposure to Death or Injury while being transported.

The usual mode of transportation is a specially designed livestock trailer which can be partitioned to separate large and small animals.

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Transportation A Farm Auto Policy may be written to

include Livestock which is owned by the insured and transported via a gooseneck trailer or Farm truck.

Caution: be sure to read the Farm Auto Policy to be sure that coverage under this form is not limited to only Dead livestock which is involved in an accident.

Check that limits per head follow the changing livestock market values.

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Transportation

There is Transit/Cargo Insurance specifically written to cover livestock which is being transported either by the Farmer or Rancher himself or by a Commercial Livestock Hauler who makes his living moving cattle across the country.

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Transportation

Two forms of stand alone Livestock Cargo Insurance are currently on the market.

Transit Limited Coverage this type of insurance is Limited to the

Specific Perils of Fire, Lightning, Collapse of Bridges or Culverts and Collision or Upset.

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Transportation

What is unique to the coverage is that should a loss occur due to a covered specified peril

The insurance is expanded when compared to a Farm Auto Policy to include Dead and Crippled Livestock.

In some cases it also will pay for Round up fees to gather the cattle following a Specified loss and will purchase the entire load of Livestock should the shipper deny the balance of the load of cattle.

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Transportation

Transit/Cargo Insurance is a Broad Form Transit Policy.

This form is expanded to include not only the perils of Fire, lightning, Collapse of Bridges and Culverts and Collision or upset but it also provides coverage for livestock which is basically being transported down a road and suddenly is jostled and gets down in the trailer and is killed or crippled.

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Transportation

The policy states in essence that “if the Livestock is loaded in good condition it will be unloaded in the same, like condition”.

Premium for this type of coverage can be expensive but it does provide the most extensive coverage for the Livestock hauler.

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Import/Export Livestock Insurance

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Import/Export Livestock Insurance Import and Export Insurance for Livestock is an ever

broadening opportunity in today’s Agricultural World. There are some businesses dedicated to providing

services to assist in the Import or Export of Livestock known as “Freight Forwarders”.

There are also individual Livestock breeders who wish to improve their current stock of breeding animals and actually travel to European Countries to contract for Bulls and Cows to add to their herd.

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Import/Export Livestock Insurance When writing this type of Insurance it is

recommended that as much information as possible be gathered at least 3 to 6 months prior to shipping of the Livestock.

Information to be noted are: Where are the Animals being shipped

from? Where are they being Shipped to?

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Import/Export Livestock Insurance

How are the animals being shipped? (the most common way is via air but there are still shipments of livestock that cross the oceans on a weekly basis)

Are the animals being shipped bred ? If they are bred how close to full term

are they?

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Import/Export Livestock Insurance Is there a quarantine period required

either prior to shipping or when they arrive at their destination?

Is transportation from the airport or dock also needed to get the cattle safely to their final destination?

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Import/Export Livestock Insurance Types of coverage offered with Import/Export

Insurance includes: Death and Crippling of the livestock while in

transit, be it via ship or plane. Protection for the Livestock while in

Quarantine prior to shipment. Protection for the Livestock while in

Quarantine after arrival at its destination Transit/Cargo coverage for trucking to the final

destination if needed.

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DisclaimerInsurance forms and endorsements vary based on insurance company; changes

in edition dates; regulations; court decisions; and state jurisdiction. This instructional materials provided by Insight is intended as a general guideline and any interpretations provided by Insight do not modify or revise insurance

policy language. The authors of these materials, Insight Insurance Consultants is a division of Insight Consulting and Management Inc. In

providing these materials, Insight assumes neither liability nor responsibility to any person or business with respect to any loss that is alleged to be

caused directly or indirectly as a result of the instructional materials provided.

Copyright 2010 – 2012 All Rights Reserved

www.insurancecommunitycenter.com

www.HartfordLivestock.com

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